Trademark licensing in RI

Trademark licensing in RI

By J.B. Lumenta

JAKARTA (JP): If you want to license the use of a trademark in Indonesia, the law says that you must satisfy the following four basic statutory requirements:

(1) The mark must be validly registered. There is no way in which a trademark pending can be the subject of a license (Trademark Act 1992, Article 44, para 1).

(2) The duration of the license shall not exceed the duration or validity of the trademark registration (T.A. 1992, Article 44, para 2).

(3) The license agreement must be registered at the Trademark Office and must be published in the Trademark Gazette (T.A. 1992, Article 44, para 3 & 4).

(4) The license shall not contain restrictive clauses which could be prejudicial to Indonesia's national economic interests or might otherwise be a hindrance to the Indonesian people (licensee) in its acquisition and mastery of technology (T.A. 1992, Article 48, para 1).

The law does not expressly stipulate the legal consequences of failure to comply with the above conditions. Article 50 of the Trademark Act says that implementing provisions on licenses under that statute "will be further stipulated by Government Regulation." That regulation has not yet come into existence.

In the absence of such implementing rules and regulations, no license agreement has yet been received by the Trademark Office for recording as required by the statute.

Nor does anyone really know what would be deemed "prejudicial" to Indonesia's economic interests or "a hindrance" to the people in their acquisition of technology.

Some experts are of the opinion that failure to have a trademark license recorded renders the contract void ab initio, while others contend that an unrecorded license remains valid and binding upon the contracting parties but is unenforceable in respect of third parties. However, under either view unrecorded licenses will be most vulnerable to attack from third parties on the ground of non-use, which might lead to the expunging of the trademark's registration.

In the face of such uncertainty it is essential that, in anticipation of the relevant implementing regulations, trademark owners/prospective licensors be on the alert in respect of these controversial issues. To get the best possible protection for your mark it is important to seek legal advice, prior to the agreement's being executed, in relation to:

(1) Avoiding "restrictive clauses" in the proposed license agreement, based on the country's current legal practice and prevailing views about fair business dealings.

(2) Which "side" documents referring to case law are needed in order that the temporarily unrecorded license agreement may stand effectively and withstand non-use attack.

Also noteworthy are the questions of "exclusivity" and "sub-licensing". Except as provided otherwise in the agreement, a registered trademark owner may grant either an "exclusive" or a "non-exclusive" license for the use of a mark (T.A. 1992, Article 45). Sub-licensing to a third party is also possible, if it is so provided in the master agreement (T.A. 1992, Article 46).

The conditions which apply to the licensing of patent licenses are similar to those applying to trademark licensing. The most crucial issues are the same in each case.

There are many provisions in the existing statutes on both Trademarks and Patents that sound good but are yet to become enforceable because of the absence of the required infrastructure, namely the implementing regulations and the necessary enforcement agencies, such as the Trademark Appeal Board and the Patent Appeal Board.

The writer is a patent lawyer with Amroos Law Consultants.